Motley Fool Money - Market Whiplash, Emerging Trends, and Battling Tech Giants

Episode Date: June 17, 2022

The Fed raises interest rates as the S&P 500 heads for its worst week since March 2020. (0:30) Ron Gross and Maria Gallagher discuss: - Stocks rallying on Wednesday afternoon only to fall on Thursday - Adobe's latest results being outweighed by guidance - Roku's new partnership with Walmart - Winners and losers from the trend of people returning to restaurants - The latest from Kroger, Oracle, and Chewy (19:00) Senior analyst Auri Hughes and CEO Tom Gardner talk with Rimini Street CEO Seth Ravin about his company's unique opportunity and its legal battle with Oracle. (35:10) Maria and Ron share two stocks on their radar: Rover Group and Sportradar Group. Our free investing starter kit includes research on 15 stocks and 5 ETFs. Get a copy simply by going to http://fool.com/starterkit Stocks discussed on the show: KR, ADBE, NFLX, ROKU, WMT, YELP, DASH, KO, PEP, ORCL, CHWY, RMNI, ROVR, SRAD Host: Chris Hill Guests: Maria Gallagher, Ron Gross, Auri Hughes, Tom Gardner, Seth Ravin Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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What? Oh boy. Fantastic. You guys go hard, man. Daredevil Born Again, official podcast Tuesdays, and stream season two of Marvel Television's Daredevil Born Again on Disney Plus. The market slides into bare territory, but software and restaurants are on the rise. Motley Fool Money starts now.

That's why they call it money. The best thing. Cool global headquarters. This is Motley Fool Money Radio show. I'm Chris Hill, and I'm joined by Motley Fool's senior analyst Maria Gallagher and Ron Gross. Good to see you both. Nice to see you. We've got the latest headlines from Wall Street.

We'll talk with Rimini Street CEO, Seth Raven. And as always, we've got a couple of stocks on our radar. But we begin with the market in general. This week, the S&P 500 officially entered bear market territory. On Wednesday, the Federal Reserve raised interest rates by three quarters of a percent, a move that provided a short-term rally, but there was more red on Thursday as the market headed for its worst single week since March of 2020. Ron, you and I were talking Wednesday afternoon after the rate hike came out.

everything turned green. Everything was going higher. It was the total opposite on Thursday. It's almost like investors can't seem to make up their minds. Yep, I think that's right. And I'm getting whiplash from the market changing its mind from one day to the next. As you said, Wednesday, the day of the 75 basis point hike announcement, Wednesday was mostly about feeling good that the Fed was aggressively pursuing lower inflation. They took the rate to a range of 1.5% to 1.75%. They expect the rate will end the year at 3.4%. So more hikes to come. So they're doing something. They're moving forward. Now, by definition, those hikes should slow the economy. That's actually the point. That's what they're trying to do. That's what we'll bring down inflation.

But then we turn to Thursday. The very next day, Chris, everyone decides that the Fed is going to have a tough time engineering, a soft landing, and we're going to be going into a recession. session. In fact, investors pointed to several signs of economic weakness that are already with us from real estate to a manufacturing survey, to some weak jobless claims, historically low consumer confidence, and stocks, both solid, speculative, across the board, aggressively sold off on Thursday. So here we are. It's hard to say, if we're near the bottom. It feels like it, but we don't know. I think there are some really great buys out there right now, but the trailing PE ratio on the S&P 500 is still a little bit high at 18.5 times from an historical

perspective. I think the day is going to come when data shows moderating inflation, and that is the day the market's going to move higher, both dramatically and quickly. The wildcard will be if we're in a recession at that point in time, and if so, how deep that recession is. But when the market finds a bottom and starts moving higher, it's going to be pretty dramatic, I think. Yeah, Maria, it seems like more and more market prognosticators are trying to guess whether or not we're in a recession, how difficult that recession will be. But to Ron's point, we are starting to see some data.

We got some data this week on things like airline ticket prices dropping for the first time this calendar year, some data around the cost of freight into the United States coming down. And so it seems like the global supply chain that we've been talking about for two years now is starting to get a little bit better. And hopefully that means better things for U.S. businesses. Yeah, I would agree. And I think anecdotally, a lot of times people will say that economists and financial people will talk about these numbers of inflation.

And the average American won't really notice or won't really care. They won't know what inflation, arguable, what inflation should be. But I think the past year or two, we've seen a lot more of the general consumer noticing things like the supply chain crisis. And now with increased prices of goods and services and restaurants, all of that is really starting to hit the consumer. So it's kind of a delayed chain reaction. And I think we're getting to the point in time where the consumer is really noticing and feeling this pain. Shares of Kroger down this week, despite what looked like good first quarter results and guidance. Speaking of what consumers are seeing, Maria, you know, interesting to see,

Kroger sharing customer habits, more of their customers going for lower priced brands and generics as inflation is hitting grocery stores. It was a solid quarter. You had identical sales without fuel increases up about 4%. Their profit margins, however, did fall with the company trying to maintain the reasonable prices that they're known for, while those supply chain costs are still quite high and the freight costs are still quite high. They're looking for areas to cut expenses, so they're trying to maximize the quantity of goods the trucks can pick up. They're buying extra inventory before prices rise further. They did raise their full year guidance, say identical sales will be up about 2.5 to 3.5%. But I agree

with you that what was really interesting to look at was that kind of shift in consumer habits. So they're saying that price sensitive shoppers are buying bigger packages when they have the money. They're making smaller purchases that they go throughout the month. They're interested in cheaper store brands. They're switching from beef to pork. We're seeing the price for food to eat at home. have risen about 12% in the past year, which is actually the largest 12-month increase since 1979. Eggs are up 32.2%. Milk is up 15.9%. Poultry is up 16.6%. So we're seeing that consumer habit shifting as well. The typical U.S. household is spending about $460 more every month to purchase the same basket of goods and services. So I think that combined with the high prices of fuel,

many people are shopping less. They're shopping more intentionally. They're not going as far away, even if you maybe like the grocery store that's a little bit farther, you're not going to pay the extra gas to get there. So I think that's going to be something that's going to persist for at least a couple of quarters. And I think that'll be interesting to watch. Adobe's second quarter profits and revenue were both higher than Wall Street was expecting. But shares of the software giant were down a bit on Friday after guidance for both the third quarter and the full fiscal year came in lower than expected, Ron. Yep, you nailed it. Shares are off 50% from their 52-week high. and they did trade down even further on weak guidance.

The quarter was solid, and management was quick to point out the highlights of what is going well. Record Q2 revenue, strong demand across all its business segments, winning in their established business, seeing significant momentum in new categories, delivered another quarter of strong financial results, greater than $2 billion in operating cash flow, revenue up 14 percent, strength across their business with Document Cloud up 27%. But operating margins were a bit weak, kind of a story we're seeing across the board due to some higher costs. So operating income only grew 8.7% while revenue was up 14%. So you see less money flowing to the bottom line. Earnings per share only up 7%. And as you said, investors were focused on the guidance. Headwinds,

including a higher tax rate, stopping sales in Russia and Belarus, negative impact foreign currency, all hitting guidance. But I will say that those things are not really operationally related, or I should say, they don't indicate any real impairment to the business. So I'm actually not that concerned about the guidance. Trading it 25 times forward earnings, not that bad, but if you're only growing earnings per share, 7%, and you issue weak guidance, you're going to get the stock to sell off. That's just the way it goes. But let's keep an eye on some of the things, focus on the operational side of their business to make sure they remain on track. Last week, we talked about reports that Netflix may be looking to acquire Roku. If that's true,

Roku is not sitting still. The company announced a new partnership with Walmart this week, wherein people using Roku devices can buy items from Walmart using their remote controls. Ria, if you're a Roku shareholder, I think you have to like the continued head-down focus of this business? Yeah, I would. I think they have their strategic goals. They're working to achieve them. I was talking a little bit to Emily Flippin this morning about this,

and she very astutely said that Roku has now achieved what Pinterest has been working on for many years, which is that product discovery with a seamless experience and trying to get people at their moments of inspiration or discovery and get them almost immediately to purchase. So this is going to be an in-platform buying experience. If you're a viewer, you're going to be able to press okay with your remote. On a shopable ad, you're going to check out details will be pre-populated by Roku Pay. It's all through Walmart, and it'll be really easy. You won't even notice, really, that you're doing it.

And I think it's kind of every home shopping network, every QVC would die to have this technology. I think of being able to get people exactly at their interest level. So I think it's going to be pretty fascinating to see how that works in the next couple of quarters. And give them points for creativity, too, because, you know, you would look at Roku's business and think, well, they're in the business of streaming television. They're all about programming. They're all about keeping people on the platform. But, you know, this is a way to keep people on the platform

and, you know, monetize shopping in a way that, you know, seemed unfathomable, you know, maybe even 10, 15 years ago. Yeah, and I think a lot of it is a ways to keep customers loyal, right? So if you find the ease of use of saying, I can actually buy things easier with Roku than I can in lots of other different platforms, I think that's a way to keep customers engaged and keep consumers on the platform. If more people are coming back to restaurants, what does that mean for delivery companies? That topic and more coming up after the break.

So stay right here. You're listening to Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here with Maria Gallagher and Ron Gross. According to Yelp, the number of people going out to dinner is on the rise as we head into prime summer months. Ron, you think about the restaurant industry and the massive changes that, it underwent over the past two years. When you think about a return to restaurants on that sort of large national level, are there

any obvious business winners or losers to you? Yeah, I think so. I mean, for sure, the delivery companies will never be able to keep pace with where they were during the height of the pandemic when we were all looking for ways to get food delivered to our homes. So Doordash and Uber eats have to continue to be impacted as the east. eating out trend continues. And for sure, it is, both anecdotally and in the data that Yelp has put forth, searches for reservations on Yelp rose 107% year over year, indicating that

people are seeking out experiential concepts, which are interesting. Things like conveyor belt sushi searches up 500% year over year, supper club searches up 200% year over year, so people are sick of being cooped up in their houses and they're looking for some interesting things to do. I think fast casual remains strong, especially for lunch. I think restaurants that have big spaces for comfortable outdoor dining, especially in the summer months, will continue to do well. But let's keep an eye on higher prices hitting menus, because that's coming if it hasn't already and potentially the slowing economy that we talked about earlier.

That could certainly put a damper on things. Yeah, Maria, you think about earlier this year, Chipotle CEO Brian Nicol coming out and talking about how they have been able to maintain price increases, pass those along to customers. But that was before the inflation that we've seen over the past few months. When you look at the restaurant industry with people, more people going back, what stands out to you? So I do think it's kind of a perfect storm, right? So you have higher prices for your raw materials and your goods. You also have higher prices for your workers. You're seeing a lot of understaffing in restaurants. So there's definitely going to be that price increase to

customers. I also think it's kind of interesting. So if you're looking at cities, New York, D.C. and Chicago are still have not gotten back to pre-pandemic levels in terms of consumer activities at restaurants. The only major city that has is actually Houston, Texas. And so I think it's going to be interesting because I live in New York. It feels like everyone is out all the time now. But it seems that statistically it's still not even at the pre-pandemic levels. Plus, If you're bringing into account how much more expensive things are going to get in the next couple months, I wonder people's urge for these type of new experiences, plus the summer months wanting to be out more if that will be able to combat these higher prices.

Real quick before we move on, Maria, would you put Coke and Pepsi in the category of potential winners here? Because you go back in time two years, a lot of what we heard out of them was the hit they were going to take because of the parts of Coke's and Pepsi. businesses that dealt with restaurants, the fountain drinks. And you can, by the way, include events, stadiums, concert venues, all that sort of thing. It seems like that's an opportunity for them to really get back to pre-pandemic levels. Yeah, I think that's a great observation. I feel like Coke, Pepsi soda is one of those things that it's not ever that expensive.

So it's one of those things that people say, oh, I'll just get it because it's not going to add to the bill that much as opposed to saying, oh, I'm going to get a glass of wine or a cocktail or a smoothie or whatever that is, those ends up being more expensive. So I think even with those increase in the prices, Coke and Pepsi could be interesting ones to do well. Oracle wrapped up its fiscal year in style. Fourth quarter profits were solidly higher than expected. Thanks in no small part to Oracle's Cloud Division and shares of the stock up a bit this week too, Ron. Yeah, off 36% from its 52-week high, but it did get a nice pop earlier this week. As you mentioned, mostly on strong demand for cloud. Total revenue up five.

percent, but 10 percent in constant currency. And we see this kind of currency conversation flowing through many of the companies we talk about. So it's important to mention. Their total cloud revenue up 19 percent. CEO said, we believe that this revenue growth spike indicates that our infrastructure business has now entered a hypergrowth phase. Nothing investors like more, Chris, than a hypergrowth phase. So they better follow through. Otherwise, they're going to get punished for it. Operating income only up 3% in U.S. dollars, but 8% in constant currency. Guidance was solid, expects first quarter revenue growth between 17 and 18%. Did warn of a $100 million hit as a result of suspending services in Russia. Only 13 times forward earnings.

That's much less than comparable companies, but they also aren't growing nearly as much as the competition. So take that into account. 1.9% dividend yield is nice. I mentioned to you during the break, because in the previous segment, you were talking about Adobe and their management on their latest call, sort of talking up the positive aspects of their business. And I was saying to you during the break, like, good for them. They should be. That's what they're doing.

So I'm not going to knock the Oracle CEO for doing the same thing. But Ron, this is a $180 billion company. Hypergrowth? Like are we going to wake up in six months and all of a sudden it's, I don't know, a $300 million dollar company? No, but hypergrowth specifically in their infrastructure cloud business, which was up 39% in constant currency. So that is pretty strong growth that they think will continue. So that could be exciting for this kind of stalwart company that we all remember from, I don't know, I want to say in the 1990s when it was one of the highest growth companies I can

remember. We'll see. It's too big right now to grow at tremendous growth rates. But the future does look interestingly positive. There is a lot of negative stuff that trends on Twitter, so it's always nice when something heartwarming gets attention. This week, a woman in Wisconsin contacted pet retailer Chewy to see if she could return an unopened bag of dog food since her dog had recently died. Chewy gave her a full refund and asked her to donate the food to a local shelter. Chewy also sent a signed note of condolences along with having flowers delivered to her home. The woman shared her story on Twitter, and in less than 48 hours, it got more than 50,000 retweets and 730,000 likes. Maria, it is a heartwarming story. I'm just going to take the

cold-hearted business angle for a second. As a Chewy shareholder, I love that this is part of how they connect with their customers. Yeah, and this isn't the first time you've seen a story like that from Chui, they have been really consistent in their customer treatment. They have 24-7 customer service. They have a net promoter score of 86. All of their customer service calls are answered in less than six seconds. And it's also we're talking about resilience in companies in a way that companies can grow in hard economic times. Dogs, cats, pet families, that's something that's really resilient, right? So 68% of American households have a pet, seven and 10 millennials own a pet. And they, they make up a large part of pet spending, which is over almost $7 billion annually.

The average pet ownership lasts 18 years. Over 90% of dog owners, 86% of cat owners consider them to be part of their family. They're willing to pay more for healthier pet food products. And so it's one of those things where you say, I might cut my cost for my splurging for my organic food, but I'm not going to cut the cost for my organic food for my pet. And so I think that's going to be something that's really interesting to watch. And so many of Chui's customers are new during the pandemic. And so I think that's going to be really exciting to see how they change.

I think it's really important to contrast those great companies that have wonderful customer service with those companies that you can't even get on the phone anymore. Try to get an airline representative on the phone. The wait time is hours. So it's really important to look at companies that are friendly to the customer. All right, Ron, Maria. We'll see you later in the show. Up next, a conversation with a small cap CEO facing off against some of the biggest tech

companies in the world. Stay right here. This is Motley Full Money. Welcome back to Motley Fool Money. I'm Chris Hill. Rimini Street is a small cap company that's going toe to toe with some of the largest software providers in the world. Rimini Street wants to be a jiffy-lube in the world of technology, offering third-party

customer support and maintenance for businesses on Oracle, SAP, and Salesforce. And as you might imagine, those tech giants would prefer to keep that business in the business In-house. Recently, Motley Fool analyst Ari Hughes and CEO, Tom Gardner, caught up with Rimini Street CEO, Seth Raven, to talk about his company's unique opportunity and its long legal battle with Oracle. Here at the Motley Fool, we tend to like founder-led businesses. We kind of have a history of picking a lot of these companies that founder-led businesses where the founder was looking to kind of solve a particular problem. Looking at your story, it's kind of, it seems very

similar. You had some time at PeopleSoft. Can you go into a little bit about that of your experience of creating the support team? And did you see an opportunity there? Well, I think as we all know, competition solves a lot of problems. And in the world of enterprise software, we were charging outrageous rates for services because we had no competition. Unlike when you go into a Best Buy, or you go take your car to a local mechanic, if you want to get your own, oil change. You can go down to Jiffy Lubb and get your $49 oil change, or you can go to the dealership and you can pay $100 for that oil change. In the world of enterprise software, we're talking about billions and billions of fees that happened every single year. But there was no real alternative,

no real third party. There was no competition. And I was on the inside looking at this because we were the guys who were charging that money. We were the guys who were chasing everyone down. And we built, for example, PeopleSoft's business on the maintenance side from a couple hundred million to 1.2 billion. So we knew how to build that business. We knew how to pressure customers into paying it. Well, who better to see that there was no competition and to create that first competitive model. And that's what we did. We came in at half the price at a better service. You know, the good old American ingenuity, get more, pay less. And that was the structure under which we built it. Now, that's what it is from a market perspective.

But when you understand the size and complexities these systems, you can understand why there wasn't competition. It took someone like us to come along who understood this complexity, who could assemble the right team of engineers. Today, we have nearly 700 engineers. engineers in 21 countries with a 10-minute guaranteed response 24 by 7, an average response time of two minutes anywhere in the world. This is unparalleled in terms of the service level we offer. It's higher than the vendors have been able to provide, and we're doing it at half the price.

And now we've added other services such as AMS where we're running the systems for our customers, but all of it delivering higher value and better service. that's what makes a great competitive market. Kind of looking at the incumbents, if the service is being provided by SAP or Oracle, did you feel for them, because they created the software, they felt, oh, well, this is a easy upsell, and there wasn't the urgency to provide good, I guess, very strong customer service at a very competitive price. Was there that sense of just, and kind of maybe to call it like entitlement?

Well, we're selling you the software. of course you're going to come to us. Well, it was a virtual monopoly because, again, the software was complex, and customers didn't have an alternative. So that allowed for no price elasticity. They literally could raise the rates. When we started maintenance, it used to be 15% of the annual, of the fees that they would pay on license.

We raised it to 16, 17, 18, then 20, then 22. and some of the enterprise players have gone to 25%. And so the prices just kept going up and up because the question was, well, where else are they going to go? So we had this captured market opportunity of $80 billion, really $160 billion in spend, but since we charge half, that creates an $80 billion market opportunity for us.

And we decided we built the right engineering teams and we were able to offer, in some ways, a better service than what they were getting from the vendor. And it really, again, is no different. I take my car to Jiffy Lub. I enjoy the oil change just fine. I don't need to pay $100 to the dealer. But I guarantee you when you're talking to whether it's one of the car manufacturers, what do they write? What do they say on TV? Hey, you should trust your car only to the people who built that car. We know it better. It's the same argument on any product when you have a third party. And when you go in and you buy that television at Best Buy, and they try to sell you a third-party warranty, right, to try and get maintenance on that product for years to come.

Third-party maintenance is a big business in the world of consumer. It just didn't exist in the world of enterprise software. So we're essentially consumerizing by creating public alternatives to what the vendors were offering. Very helpful. Can we talk a little bit about what does this? sales process look like if I'm a customer, maybe from the sense of either, are you selling upon adoption of SAP or are they usually already have the support? And then the sales team comes in and says, hey, you know, we have this very competitive offering. What does that process kind of look like?

Well, they're going to be up and running on the software generally. The vendor will get them up and running. Now, remember, these are huge systems. If you're someone like T-Mobile, you have spent potentially billions to install your SAP billing system. So they call in Ramini Street, and part of the reason they call us in is because they were facing a multi-billion dollar mandatory upgrade from the vendor, multi-billion, and it would take years. That's how big these systems are. And they took a look at this and said, wait a minute, why would we do that?

The software we're running is fine, and you guys know this. When you're on Microsoft Word, they probably. have to pry it out of your hands every time there's a new version. They want to tell you it's got all sorts of new features. But the reality is, if you're like me, you do a few simple things. You write documents, you spell check them, you format them, and then you print them and send them. And you use the same five features probably for the last 15 years. Now, there's probably a hundred new features in the latest version of Word that I know nothing about, and I'm sure they're great, but I prefer to keep using the one that works for me. The same is true in these large enterprise

systems. The cost and the change management of having thousands of users change out, all of that. Well, T-Mobile, for example, decided that they wanted to invest in 5G. They aggressively want to be the largest 5G provider in the United States. Well, I can spend $2 billion on my billing system, or I can spend $2 billion in my business where it really can help make a difference as to why people would want to use my mobile service. And that's the way we work with the largest of retailers, manufacturers, banks. All of them are trying to invest in their business and spending extra money on these core transaction systems that they don't need to spend while they're not getting very good service anyway. Doesn't make good business sense.

Did you expect when you started the business that there would be, from what you knew about Oracle, a very litigious company, did you expect that you would be in litigation? Did you have any anticipation that it would go as long as it has and that it would just be a core part of the Rimini Street experience? Or did it surprise you? Well, most people know about the 12 years we've been in physical litigation in the legal system, starting in 2010 through now. What they don't know is that the day after we launched the company in 2005, I got my first letter from Oracle's predecessor, Siebel, saying, you can't do this. You can't offer services for our products. And that was the beginning. So we've actually been in litigation battle with the legal department of Oracle and its predecessors since pretty much the day after launching the company,

which was six months before we ever had our first customer. So this has been a battle from the very beginning. And yes, did I know that we would have contentiousness in this process? Show me anyone who's disrupted people who are generating profits, the size of Oracle and SAP, who are not going to take actions to protect what is essentially a monopoly business driving over a 90% gross margin. of course we knew that they weren't going to give it up without a fight. I don't think anybody

could predict how many years in the U.S. legal system a case could go. But here we are 12 years later. We have the biggest and best lawyers in the world, the Gibson Duns, who, by the way, are the same team that won billions against Oracle for HP on the Itanium matter. So we have the best lawyers, very, very expensive. We spend $1,000. 15 to 20 million a year in litigation costs, which of course we would rather spend investing in the business. But that's part of breaking open a monopoly. If you're going to open the market to pure competition around the world, we saw this in the cable days, whether you were cable and telecom, all the battles that took place have to go through the court system to create that open

market competition. We're the guys leading the spear on this. Now, I'm hopeful that there will be many companies who follow behind us. We create this robust economy of various choices, different price points, different services, just as with the car industry. We have 100 different choices of cars, from cheap ones to expensive ones with different features. We someday should see the same on enterprise software support. So in a way, you see everyone acting in a rational way in the marketplace. For example, if you were the CEO of one of the monopolies, you would be doing what they're doing. It's just that you've chosen from a career standpoint to not be in the cubicle measuring business and the very large monopolistic price-raising, dominant, let's say,

moderate quality service relative to what you can provide taking the entrepreneurial path. But you basically see this is happening and this is all rational what's happening. And then you're looking forward to the completion of the court's review. Well, I don't think the U.S. court system is as rational as we would like it to be. Of course, it favors large players with unlimited budgets. I mean, think about it. Look what we've had to spend. That's money we've generated ourselves.

How many small businesses could ever last under the crush of an unlimited budget spend of a company the size of Oracle at $40 billion? You know, that's a real problem. And that's really something for the U.S. to think about. Now, you don't see this internationally because internationally, These types of suits are more handled by governments. They're government actions when people fall outside of monopolies or issues. This is how the U.S. court system works. And it allows a case like this to go on for 12 years and to cost 15 to 20 million.

Unlike the criminal courts where you're entitled to a defense, in the world of civil litigation, if you don't step up with some, pay the money and have the, the right lawyers, you could get crushed in the court system because the amount of paperwork, the years of court time for a small company would be impossible. And the truth is, is that by the time Oracle sued us in 2010 and we began the actual litigation at the courtroom level, we were lucky to be big enough at that point to be able to afford the legal fees. If they had filed suit against us years earlier when we were just a couple million dollars of revenue, there's no way we would have been able to afford that kind of defense. We would have been dead just by the filing. And that's

what you mean by litigate people to death. And that is, unfortunately, a flaw in the U.S. litigation program and in our court structure that someday we should probably think about addressing. And that may speak a little bit as to why about half of your revenues come outside the U.S. Yeah, I think that that's part of it, but I really do think it's because the business problem we solve is universal. You know, it was something that I thought was pretty funny that I've looked at was, you know, it took a lot to bring Israel and the Arab Middle East together. Finally, with some of the Abraham Accords and we're seeing some great work between the UAE and Israel above the threshold, invisible. And one of the amazing things was we found commonality across Israel and the Arab Middle East,

everyone feeling they're paying too much for enterprise software maintenance and getting too little service. There are things that we can rally around that are a global experience. And we found one that really resonates throughout the whole world. Up next, Ron Gross and Maria Gallagher return. If you're looking for stock ideas, good news. They got a couple of stocks on their radar. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and

the Motley Fool may have formal recommendations for or against. So, don't buy ourselves stocks based solely on what you hear. Welcome back to Motley Fool Money, Chris Hill here once again with Maria Gallagher and Ron Gross. If you were just starting out investing, or you know someone who's looking to get started in investing, we got some good news. We have a free investing starter kit. It covers everything from saving money to 401K plans to buying your first stock. It comes with a built-in watch list of 15 stocks and five ETFs that were selected by our

investing team. And it's free. You can just go to fool.com slash starter kit. That's fool.com slash starter kit. Let's get to the stocks on our radar. Maria Gallagher, you're up first. Our man behind the glass, Dan Boyd, is going to hit you with the question. What are you looking at this week?

So I'm going to look at Rover. People are probably familiar with it as the largest network of pet sitters and dog walkers. I've been considering trying to become a weekend dog walker just because I miss hanging out with dogs. It has over 500,000 pet care providers throughout North America and Europe. Last quarter, their revenue was up 128%. They had 179,000 new bookings, total bookings of $1.2 million. They're expecting 55% increase revenue this year. I think it's a really interesting business model. I think it's a really interesting business. as I talked about, I think resiliency exists within the pet space. And so I think it's kind of a fun one to look at. And the ticker simple? R-O-V-R. Dan, question about Rover? Absolutely, Chris. Maria, what about pet sitting makes you want to do it on the side instead of, I don't know,

having a weekend or an evening to yourself? I'm not saying I'm going to pet sit. I'm going to pet walk. I could just take a dog out for like a 20-minute one. walk, play, have a nice time, make some new friends in the park, and then take them home. They don't have to come into my apartment. I don't know. I feel that that's even worse.

Ron Gross, what are you looking at this week? A company that literally just hit my radar because it was recommended in our future of entertainment service is Sport Radar Group, S-R-A-D, and no, I didn't make this company up. It's based in Switzerland. It's the leader in the business of gathering, analyzing, and providing sport data to league, betting operators and media companies. They signed deals with various sports leagues in order to obtain the data. They then analyze that data and sell the analysis to the sports gambling sector and media companies. They have agreements with 250 sports leagues and federations around the world,

including the NBA, NHL, and MLB. Over 1,700 customers in more than 120 countries. Sport radar covered almost 900,000 different events last year. Right now, 30 states and the judges of Columbia have legalized sports gambling. California could be next. That would be quite big for the business. I will point out that they do not have the rights to NFL data for the U.S. That's kind of a big deal. Their next biggest competitor, Genius Sports, does own the rights to that data.

So something to be aware of. And the ticker? S-R-A-D. Dan, question about sport radar group? Well, besides the obvious, Ron, did you make this? up that's already been covered. Ron, are they contracted with like the leagues like commissioners office or league office or whatever? Are they contracted with teams themselves to analyze data? Because I feel like at least for baseball, a lot of data analytics happens in-house.

I need to dig deeper to answer all of your questions, quite frankly. No, but they do with the leagues. The leagues and the federation. So they're at the top level, not with individual teams. I think the leagues like to maintain tight control over that data. And so they handle the negotiations and the licensing. And that's where you got to go if you want the data, get it from the top. Dan, what would you like to add their watch list? I'll tell you, as much as I'm ragging on Rover, I do have pets here at home. And it can be kind of a hassle when we have to go somewhere and get somebody to take care of them.

So I'm interested. I'm interested in Rover. Maria Gallagher, Ron Gross. Thanks so much for being here. Thanks, Chris. Thanks for having us. That's going to do it for this week's Motley Full Money radio show. The show is Mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.